A Funder Seeks More Insights About Inequality. Will That Make a Difference?

When it comes to economic inequality, most funders have an angle. A range of liberal foundations, most notably Ford, not only see inequality as bad, but are backing policies they think might curb the problem, including an expansion of labor rights, more progressive tax policies, and tougher controls on Wall Street. Meanwhile, a host of conservative funders have long pushed back against regulation of the economy and redistributive policies.  

Then there’s the Laura and John Arnold foundation, which has recently arrived in this space with lots of questions (and money) but, as yet, no set policy agenda.

Arnold is working the topic of inequality as part of a wide-ranging effort to promote evidence-based policy, which has become a hallmark of the foundation’s grantmaking. Many funders are interested in evidence-based policy, of course, but typically in the context of the issues they’re working on, like healthcare or education. Arnold takes a different approach, starting with the premise that public policy should be more based on evidence, and then looking for areas where new research could make a difference.

“We exist in a target-rich environment,” says foundation Vice President Josh McGee, referring to the myriad areas where policymakers either ignore existing social science or lack the data needed to make better choices. “In most areas of policy there’s not enough routine use of evidence-based policy.”

The Arnold Foundation sees the super-contentious debate over inequality and opportunity as a place where more research is needed and could make a difference. Is it right? I’ll come back to that question in a moment. First let’s look at where grant money has been going.

One grant has gone to scholars at the University of California at Berkeley to develop better data using IRS income tax information in order to study a range of issues related to inequality and opportunity. The funds are going to the university’s Center for Equitable Growth, led by Emmanuel Saez. Drawing on the new data, scholars will try to answers such elementary questions as whether all income groups benefit equally from economic growth and how much a college degree determines economic success; it's also addressing more complicated questions like whether tax credits for businesses can help economically battered neighborhoods get back on their feet.

Along similar lines, Arnold funds have supported new research on mobility led by Harvard scholar Raj Chetty, whose Equality of Opportunity Project uses big data to explore how to improve economic opportunities for low-income children. That work has received lots of attention this year for its finding that where kids grow up has a big impact on whether they can escape poverty and move up the economic ladder.

Earlier this month, the Arnold Foundation announced grants to study the effects of hikes in the minimum wage that have been enacted in Los Angeles, Seattle and Chicago. The research, to be conducted by scholars at UCLA and the University of Washington, seeks to shed new light on the age-old question of how raising the minimum wage affects employment, but also the more basic question of whether this change really does translate into significant benefits for workers “in areas such as health, food security, and overall earnings” and increased spending power in low-income neighborhoods.

Now, you might ask: Do we really need yet more research on the minimum wage? Hasn’t this topic already been studied to death?

Josh McGee argues that the new minimum wage hikes are unique. “The size of the increase is different. We’re talking about five dollars, in some cases.” And because these laws have only recently been enacted, there is a huge opportunity for researchers to start tracking the effects in real time, as they take place. The studies funded by the foundation will be conducted over the next three years, finishing up in 2018.

There’s little question that all this new researchon inequality, mobility, and the minimum wagecan be valuable. Earlier this year, I wrote about how wide-ranging scholarship on inequality backed by the Russell Sage Foundation seems to have affected national debates, particularly studies by Larry Bartels and Martin Gilens that documenting how economic disparities stack the deck of U.S. politics in favor of the wealthy. Thomas Piketty’s book, Capital in the Twenty-First Century, made an even bigger splash (whether people actually read it or not.) And recently, I wrote about the research being done by the Washington Center for Equitable Growth that is digging further into the relationship between inequality and growthchallenging the idea that efforts to level the playing field inevitably slow the economy (when, in fact, the opposite may be true, with boosting the middle class a key to driving growth.)


Still, here’s a caveat about all this investment in new research, as well as the cause of evidence-based policy more generally: Who’s to say that most voters or politicians actually care what social scientists think? There’s plenty of reason to think many don’t, since lots of evidence-based solutions are never embraced by those who make policy. So how much value is there in piling up even more studies on stacks already covered with dust?

I know, that sounds cynical and pessimistic, but just look at where we are on any number of key issues, starting with climate changewhere the evidence has long been settled but where major policy change has been elusive. Or family planning, where the huge benefits of more access to contraception have been crystal clear for a centuryand yet over 3 million unintended pregnancies still occur each year in the U.S., a nation that resists family planning policies embraced by every other advanced nation.

Inequality is another area of policy where the facts don’t much seem to matter. In broad strokes, reducing inequality isn’t rocket science. I can think of a half dozen policy interventions off the top of my head that would reduce inequality, like taxing capital gains as regular income, redirecting hundreds of billions of tax expenditures to less affluent Americans, making it easier for workers to form unions, and expanding the generosity of such programs as the EITC and Social Security.

Sure, these steps wouldn’t really address the broader drivers of inequality related to globalization and technological change, and there are some important questions about the economic effects of these and other steps, like big hikes in the minimum wage. But my point is that there’s already a lot of low-hanging fruit around, in terms of ways to reduce inequality. It seems unlikely that more research will move the needle on equity debates, which have historically been swayed by the values and biases that Americans bring to questions about government, markets, and individual responsibility.

Chetty’s work on economic mobility underscores the dubious value of more data. Did we really need a group of Harvard scholars to tell us that where kids grow up makes a big difference in their lives? To be sure, the rich new detail of that research is compelling, but we’ve known the basic truth on this score for decades. Meanwhile, efforts to fight housing segregation have completely stalled out amid fierce opposition from affluent, white communities (with philanthropy also dropping the ball on this front, by the way, as we’ve explored at IP).

Related: Memo to Funders: Fight Exclusionary Zoning to Make Headway Against Inequality

I’m all for more research, as long as we remember the limits of reason when it comes to shaping public policy outcomes. Research disconnected from advocacy sounds pure and wise, but nowadays tends to disppear into a black hole. On issues of economic equity in particular, we need to remember that social movements, on both the left and the right, have done infinitely more to shape policy than social science.